Japanese Housing Market Continues Strong Pace

Posted by Jim Ivanoff
February 25th, 2013
Timberframe house under construction

Timberframe house under construction

The housing starts for 2012 are in and are better than had been anticipated. Last year when the Japan Forest Journal surveyed 15 top home builders, the forecast for the year came in at 870,000. However, with starts rising 10% in December to total 75,944, the housing market for the year finished at an impressive 882,797 units. This was an increase of 5.8% over the previous year and also marked the third straight year of growth after the market began to recover from the Lehman Shock.

Demonstrating the soundness of this recovery, growth across all housing sectors continues to be seen. According to MLIT statistics, custom homes increased by 9.2%, rental units by 11.2%, and spec homes by 9.8%. Looking at the numbers by the type of wood construction method, we see that zairai grew by 6.3% to 31,840, 2×4 by 10.5% to 10,258, and wood pre-fab by 12.9% to 1,454.

Perhaps the best news for the Canadian lumber industry though was the fact that 2×4 starts were up 9.4% on the year to end at 107,487. This number is just shy of the record set in 2008 emphasizing the continuing strength and market penetration of the 2×4 system.

Going forward, high SPF prices and a weaker yen versus the dollar is creating some concerns. However, as all input prices in the Japanese construction industry are under pressure, this is not a problem unique to 2×4. In fact, wages of skilled labourers around Tokyo have jumped by as much as 40% due to the strong housing market combined with reconstruction work in Tohoku. The costs of materials such as concrete are even delaying reconstruction projects as budgets have been stretched.

Despite cost concerns, most of the industry people I have been speaking to since the beginning of the year are predicting a strong 2013. The major push continues to be the planned rise in the consumption tax in 2014, but favourable sentiment is now also being driven by the new Prime Minister’s economic policies. A similar survey of the 15 major builders for 2013 resulted in a projection of 920,000 starts. With the current positive climate in Japan it is quite likely that this forecast will also be easily surpassed.

Comments are closed.